Napa, Calif. -- A few encouraging themes for struggling California winegrowers stood out from the mostly gloomy assessments presented at Tuesday's Vineyard Economics Seminar attended by about 150 growers, winemakers, bankers and other industry professionals. One of the most dramatic points of the day was made by Joseph Wagner, whose family founded Caymus Vineyards in Napa Valley, when he recommended that more growers should consider mechanized farming to reduce their costs and potentially raise the quality of their grapes at the same time.

Wagner revealed that his winery's flagship product, Caymus Special Selection, among their other wines, is now made with a majority of grapes grown using a blend of mechanical and hand labor. He added that the 2007 vintage just received a 96-point score from Wine Spectator. It was a rare public revelation by a blue-chip California winery that it uses machines for pruning, leaf-pulling and harvesting to create one of the state's most expensive and critically acclaimed wines.

"We started doing a lot of mechanized farming six or seven years ago, and it is working well," said the third-generation owner and managing member of Caymus. He and other winery representatives were speaking on a panel titled, "Wine Buyers Tell What They Are Thinking," in which they offered a range of advice to growers on how to become more competitive and deal more effectively with the wineries that buy their grapes.
Growing evidence
It is well documented that mechanizing vineyard tasks can save significant time and money for growers despite the capital investment, yet many California growers and wineries remain leery, preferring the use of hand labor by Latin American immigrants. Wagner's revelation adds to a growing body of evidence that mechanization can also bring very high-quality results.

Wagner said that wineries should be much more accepting of growers who use mechanized means for harvest and other tasks. He explained that in many of the vineyards Caymus farms, it uses machines to perform a first pruning of the vines in winter, followed by a second pruning by hand. Caymus also performs a pre-leafing operation early in the growing season mechanically to let more sunshine and air into the fruiting zone of the vine canopy, followed by hand leaf-pulling where needed to expose more specific areas. In addition, mechanical cultivation allows higher density plantings that can yield more tons per acre, he said.

Mechanization also received support from a speaker in a different session, Glenn Proctor, a partner in the wine and grape brokerage, Ciatti Co., of San Rafael, Calif. He recommended that growers consider "new premium production models" to lower their costs per ton, potentially grow more tons per acre and stay competitive with growers from other regions and wine-producing countries. "People who have said they will never do it by machine may change," Proctor said.
Economic outlook
The overall economic picture is dreary for many growers in coastal California regions. A majority of their winery customers want to pay less, and take fewer tons, since sales of the high-tier wines that coastal grapes go into have been severely slowed by the lingering recession. As winery inventories have backed up, the wineries' appetites for renewing grape contracts, taking on new growers, and so on has dropped accordingly.

The 2010 harvest will see a greater percentage of non-contracted fruit than in the past, Proctor predicted. "Buyers are cautious. Their finance people are saying don't buy, and their lenders are saying they can't lend."

Proctor advised growers to move quickly on reasonable offers from wineries, if they are confident of being paid promptly. He said growers should be proactive, call their winery customers and suggest some creative options. Some may want to consider turning their grapes into bulk wine this season, he said, as others did last year when the grape demand first slumped.

David Freed, the chairman of the Silverado Group and one of the seminar's organizers, is also a large-scale grape grower. He predicted that 2010 would continue to be challenging for growers without contracts. In a survey done before the seminar, only 44% of respondents said they had long-term contracts in place, while 40% had short-term and 16% are hoping to sell on the spot market.

"After 2010 I think we'll be back to something like normal again, whatever that will be," Freed said. More optimistically, he added that 93% of the respondents expected growth in 2012. "This is a good industry to be in long term. It's not like the auto industry. Wine has been around for 4,000 or 5,000 years, and it will recover again this time."
Not all bad
The economic situation for grapegrowers in the interior valley is better than on the coast, according to Nat DiBuduo, president of Allied Grape Growers, a cooperative of growers in various parts of the state. Because valley growers pulled out thousands of acres of vines in recent years, and because low-cost wines are booming in sales, they are now getting good prices relative to their lower costs of production.

"My San Joaquin Valley growers have been kicked in the shins for 10 years in a row, but this year they are not," DiBuduo said.

For him the situation now is not one of oversupply, but under-demand. The 2009 harvest was the second biggest in 10 years (after 2005), but with foreign imports of bulk wine not particularly problematic at the moment (according to Proctor), the challenge is to promote and market California wines better, DiBuduo said.

The grape varieties in greatest demand now, according to Proctor and DiBuduo, are Pinot Grigio, Pinot Noir, Cabernet Sauvignon and one really bright if small star: Muscat. Both Muscat Alexandria and Muscat Canelli are being scooped up for light, slightly sweet, affordable Muscat or Moscato wines.